Australian consumers discouraged in February
2023.02.14 01:46
Australian consumers discouraged in February
By Kristina Sobol
Budrigannews.com – A private survey conducted on Tuesday found that consumer sentiment in Australia deteriorated in the early part of February. This was due to consumers becoming dissatisfied with the economy due to elevated inflation and the possibility of additional pressure from interest rate hikes.
The suffered a modest recovery over the previous two months when it fell 6.9% in February to levels close to historic lows.
According to a statement released by Westpac, the Reserve Bank of Australia’s resumption of its rate hike cycle and the larger-than-expected rise in inflation in the fourth quarter were the primary contributors to the decline in sentiment.
Consumer sentiment in Australia was back to levels seen during the financial crisis of 2008, just a hair above the lows seen during the COVID pandemic in 2020.
The reading reflects the growing economic obstacles that Australian consumers face, such as trends that are at 30-year highs and rising mortgage costs. Due to the absence of evidence that inflation was cooling, the RBA had earlier this month signaled additional increases.
“The consumer sentiment survey continues to provide a very clear warning that the pressures that are putting pressure on consumers are becoming more intense. Matthew Hassan, Senior Economist at Westpac, wrote in a note, “While spending has held up relatively well to date, we expect an abrupt slowdown to show through in the coming months.”
In February, consumer perspectives on the economy deteriorated even further, with a particular sharp decline in family finances. According to Westpac, consumers also anticipate a particularly challenging year in 2023.
Among consumers, job market optimism remained the only bright spot, but even that showed signs of waning. Through 2022, the job market in Australia was at a record high, hovering close to 50-year lows.
The post-COVID boom in Australia is expected to slow down in the coming months as the effects of severe monetary policy tightening continue to be felt. The RBA recently issued a warning that employment and economic growth will likely decline in the coming months.
Consumer sentiment is likely to be further eroded by the trend.
